Diamondback (FANG) JV Acquires New Water Infrastructure Assets

Diamondback Energy’s FANG joint venture (JV) with Five Point Energy LLC, Deep Blue Midland Basin, has acquired the water infrastructure assets from Lagoon Operating Midland. The acquisition underscores the JV’s commitment to sustainable water management practices at the heart of the Midland Basin. The financial details of the transaction have not been disclosed.

Lagoon’s assets include a large-diameter pipeline spanning approximately 105 miles, a disposal capacity of 240,000 barrels per (bpd) and an additional permitted disposal capacity of 544,000 bpd. The assets are located mostly in the Martin County, TX.

The acquired assets should complement Deep Blue’s existing infrastructure and significantly enhance its capabilities in water recycling. FANG also stated that the expansion of Deep Blue’s water recycling capabilities is driven by a strong portfolio of acreage dedications and minimum volume commitments from key producers in the basin. The acquisition not only solidifies Deep Blue’s position as an important player in water management but also ensures steady demand from important producers in the Midland Basin.

The JV, formed in 2023, has made significant strides in expanding its commercial presence and asset base. Deep Blue has secured multiple third-party commercial contracts, which represent nearly 60,000 dedicated acres including seven new counterparties.

Following the closure of the transaction, the JV boasts a permitted produced water disposal capacity of approximately 2.5 million barrels per day (MMbbl/d). Additionally, Deep Blue’s current infrastructure involves an extensive pipeline network of 1,000 miles of large-diameter pipelines with a redelivery capacity of over 600,000 bbl/d.

Deep Blue stated that the acquisition has benefited the JV by uniting complementary water infrastructure, thereby expanding its footprint in the Midland Basin and driving synergies across the entire business.

Zacks Rank and Key Picks

Currently, FANG carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the energy sector are Archrock Inc. AROC, Hess Midstream Partners LP HESM and Sunoco LP SUN.Archrock presently sports a Zacks Rank #1 (Strong Buy), while Hess Midstream and Sunoco carry a Zacks Rank of #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Archrock is an energy infrastructure company based in the United States, with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues.

Story continues

Hess Midstream owns, operates, develops and acquires a wide range of midstream assets, providing services to Hess Corporation and other third-party customers. The partnership has a stable fee-based revenue model secured via long-term commercial contracts. Since Hess Midstream operates through 100% fee-based contracts, it is exposed to minimal commodity price risks.

Sunoco LP is one of the largest distributors of motor fuel in the United States. The partnership distributes fuel to independent dealers, commercial customers, convenience stores as well as distributors. Its current distribution yield is greater than that of the composite stocks in the industry, providing unitholders with consistent returns.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Sunoco LP (SUN) : Free Stock Analysis Report

Diamondback Energy, Inc. (FANG) : Free Stock Analysis Report

Archrock, Inc. (AROC) : Free Stock Analysis Report

Hess Midstream Partners LP (HESM) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research